Cash for Clunkers ends, cash for appliances coming soon

The $3 billion “Cash for Clunkers” program officially ends today, having helped generate at least 625,000 new car sales. Representative Bruce Braley, a key advocate of the program, is holding an event this morning in Bettendorf with John McEleney, Chairman of the National Automobile Dealers Association, and Gary Thomas, President of the Iowa Automobile Dealers Association.

Meanwhile, Energy Secretary Steven Chu has announced that $300 million in stimulus money will go toward cash incentives for consumers to buy energy-efficient home appliances:

Beginning late this fall, the program authorizes rebates of $50 to $200 for purchases of high-efficiency household appliances. The money is part of the broader economic stimulus bill passed earlier this year. Program details will vary by state, and the Energy Dept. has set a deadline of Oct. 15 for states to file formal applications. The Energy Dept. expects the bulk of the $300 million to be awarded by the end of November. (Unlike the clunkers auto program, consumers won’t have to trade in their old appliances.)

“These rebates will help families make the transition to more efficient appliances, making purchases that will directly stimulate the economy,” Energy Secretary Steven Chu said in a statement announcing the plan. Only appliances covered by the Energy Star seal will qualify. In 2008, about 55% of newly produced major household appliances met those standards, which are set by the Energy Dept. and Environmental Protection Agency.

Replacing old appliances can significantly reduce a household’s energy use and utility bills, so this seems like a good use of stimulus money. However, some analysts are skeptical that the new program will be as successful as “Cash for Clunkers”:

“The cash-for-clunkers (program) had a discernible value proposition for the consumer, because he knows how much his (clunker) is worth,” says [Sam] Darkatsh, the Raymond James analyst. “With appliances, there is no trade-in. You can walk into Home Depot and get a great deal on a home appliance any time you want one. Why would it drum up sales now?” Laura Champine, an analyst with Cowen & Co., agrees. “I’m not sure if it will be as powerful as cash for clunkers because there is something compelling about that $4,500 discount,” she says. “Also, a new car is more fun than a new dishwasher. So I’m not sure if it will be as much of a driver, but any driver is welcome right now.”

Share any relevant thoughts in this thread.

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Cash for Clunkers gets $2 billion from stimulus funds

President Barack Obama signed a bill today allocating an additional $2 billion to the to the Car Allowance Rebate System, more commonly known as Cash for Clunkers. The money will come from the American Reinvestment and Recovery Act (the economic stimulus bill approved in February). The Senate approved the bill by a 60-37 vote on Thursday night. Senator Tom Harkin voted yes, and Senator Chuck Grassley, who criticized the program earlier this week, voted no.

I liked Harkin’s idea to put income limits on this program, but the Senate wanted to get this measure passed before the summer recess. If the Senate had approved a different bill from what cleared the House last week, the funding would have been delayed until September.

The Senate vote went mostly along party lines, but four Democrats joined 33 Republicans in voting no, and seven Republicans joined 53 Democrats in voting yes.

I’m pleased to learn that most consumers who have taken advantage of this program have traded in a “clunker” for cars that get significantly better mileage. (Click here for lists of the most popular vehicles traded in and the most popular purchased with Cash for Clunkers vouchers.) The way Congress wrote the bill, people could have traded in SUVs and trucks for similar vehicles with only minimal improvements in fuel economy.

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"Cash for Clunkers" goes into effect

The Car Allowance Rebate System, also known as “Cash for Clunkers,” goes into effect today. The National Highway Traffic Safety Administration is running the program, which received $1 billion in funding from the supplemental war funding appropriations bill Congress passed in June. Congressman Bruce Braley (IA-01) was among the key House sponsors of this program.

The Quad-City Times praised Braley’s “collaboration and innovative work” on this bill and recapped the guidelines:

$3,500 voucher

– New vehicle must get at least four miles per gallon more than the trade-in.

– A new truck must get at least 2 miles per gallon more.

$4,500 voucher

– The new car gets at least 10 miles per gallon more than the trade-in.

– The new mini-van, small truck or SUV gets at least five miles per gallon more than the trade-in.

– The new full-size pick up or cargo van rated at 15 miles per gallon or more, gets at least two more miles per gallon than a similar trade-in.

Condition of the trade-in:

– Must be driveable

– Have been owned and insured for at least a year.

– Any vehicle built after mid-1984; or a large work truck no newer than 2001.

– Any Category 1 or 2 vehicle (car, minivan, SUV, light pick up) with a combined MPG of 18 or less. This does not apply to category 3 trucks (large pickup trucks and cargo vans).

This website answers some frequently-asked questions about the program in greater detail.

I’ve been hearing radio ads in central Iowa suggesting that some car dealers will match what customers get from the government through the “Cash for Clunkers” program. New car sales have fallen dramatically during this economic recession.

I would have liked to see this bill focus more on energy efficiency, but Braley’s work was well-intentioned. This program should boost sales for automakers while helping a lot of consumers.

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